Planning corporation’s productive environment requires keen and sober judgment about the economics of the strategy. Poor planning will most likely lead to lose of incentives for employees as well as infighting in the company in question. Not only does the corporation suffer within, it also reaches investors and consequently affects the bottom line of the corporation.
About Jeremy Goldstein
The career of Jeremy Goldstein has seen him employed in multiple and major companies in the financial sector. He has worked for Goldman Sachs and later The Bank of America. When it comes to management of incentive based earnings and per share capital income, Jeremy has a wealth of experience in this field as well. He demonstrates how incentives can be used in pay based arrangements.
Jeremy Goldstein is a well educated professional having graduated from Cornell University. He majored in history. Later, he enrolled for a master’s degree at the University of Chicago. His Juris Doctor in Law is from New York University’s School of Law. He studied law from 1996 to 1999.
Impact of Earnings per Share (EPS)
Without doubt EPS has a big role to play in attracting investors through influencing the stock price. With the stock price being high, the firm’s trading habits appear to do well. With investments trickling in, companies are enabled to remunerate their staff well and keep up the good work. As much as this looks like a win-win situation, EPS can sometimes be leveraged for unfair advantage.
Why Some are Against EPS
The use of EPS in corporations does away with team work and instead grants the CEO carte blanche. In some cases CEOs may thrive, but where they do not, they are solely blamed even when in truth the fault is not as a result of poor management on their part. Where CEOs are made responsible for EPS, the shareholders suffer the fate of misinformation since the metrics employed to compute EPS is influenced by the Chief Executives.
Apart from EPS being skewed when in the hands of CEOs, opponents have said that it lacks long term strategy and is therefore a short term approach. Performance based incentives are also frowned at by critics for being unreliable and ever changing. Larry Fink is for instance in the front row of critiques of the metrics used in EPS.
According to Jeremy Goldstein, there exists a balance between the advantages and the disadvantages of EPS. Doing away with incentives would in fact hurt the morale in companies. Instead Jeremy strongly suggests that companies come up with strategies to hold their management accountable.